Truth is stranger than fiction: fraud came complete with a fake courtroom and costumed employees

Late last year, the Pennsylvania Attorney General (AG) filed a consumer protection¬†lawsuit against an Erie debt collection company accusing it of using deceptive tactics to mislead, confuse or coerce consumers. The AG called the company’s actions “an unconscionable attempt to use fake court proceedings to deceive, mislead or frighten consumers into making payments or surrendering valuables to the company without following lawful procedures for debt collection.”

According to the lawsuit, the company allegedly used fraudulent civil subpoenas – sometimes served by deputy sheriff impersonators – to summon consumers to its office which included an area referred to as the “courtroom” and was the stage for fictitious proceedings to intimidate consumers into providing access to bank accounts, making immediate payments or surrendering vehicle titles and other assets. The bogus courtroom was set up with furniture and decorations similar to those used in actual courts, including a raised judge’s bench, two tables and chairs in front of the bench for attorneys and defendants, a simulated witness stand, seating for spectators, and shelves with legal books. And in some of the fake hearings, an individual dressed in black was seated as the “judge.” After the staged proceedings, the company’s employees allegedly were dispatched to the consumers’ homes in order to retrieve documents or to compel them to sign payment agreements.

In conjunction with the lawsuit, which seeks restitution for all consumers who have been harmed by the company’s unfair trade practices, the AG filed a petition for, among other remedies, a special and preliminary injunction asking the court to freeze the company’s assets, and prohibit it from engaging in any debt collection. Fast forward to November 2011: the company is now defunct, and the AG’s office is resuming its suit against the former president who several months ago filed for personal Chapter 13 bankruptcy which insulated him from creditors, but not from the Attorney General’s Bureau of Consumer Protection, according to Chief U.S. Bankruptcy Judge Thomas P. Agresti’s ruling.

And there is more. According to published reports, an Erie district judge is suing the publisher of the Erie Times-News, its web server and three reporters for defamation in connection with stories, which allegedly made it appear that he was part of the sham perpetrated by this debt collection agency.

Just like this case, many of the attorney general’s complaints read better than fiction, but these scams are real and cause very real damage to individuals and companies. Many consumers do not realize that state attorney general records are searchable and it is imperative that these records are included in all comprehensive background investigations.